Where Hospital Boards Often Fail: Auditing Leadership Performance.

Hospital boards address quality of care and patient safety as well as financial performance through long-accepted practices. By contrast, a hospital's administrative operations and institutional culture are not usually subject to such detailed scrutiny. Yet, despite a healthy bottom line and patient commendations, hospital personnel can be underperforming, burdened with poor morale, and suffering from less-than-optimal leadership, unwarranted inefficiency, and ethically questionable management practices. The resulting employee dissatisfaction or disengagement can affect productivity, quality, turnover, innovation, patient and donor attraction and retention, public image, etc., and can be missed by an unsuspecting board. While boards do not scrutinize most administrative operations, they do examine financial performance, through review of the independent auditor's Management Letter. Designed to help the chief financial officer (CFO) improve the efficiency and integrity of the hospital's financial systems and to recommend improvements to the board for implementation (rather than to assess the CFO's performance), the Management Letter has no equal with respect to a comparable evaluation of the hospital's administrative performance and workplace culture. When, as is often the case, there is only superficial review of the chief executive officer, the board has no source of analysis or recommendations to improve the hospital's institutional environment. In this Invited Commentary, the authors suggest a methodology to provide such a review, leading to a Leadership Letter, and discuss its utility for both nonprofit and for-profit organizations.

Governance of the academic health center: striking the balance between service and scholarship.

Academic health centers (AHCs) rank among the most complex organizations. Spanning the domains of university, clinical practice, hospital, and research, AHCs encompass a range of strikingly different business models, each with its own economic potential. The ability to bring these diverse enterprises actively working together has been the unique strength of the AHC as a vehicle of patient care, education, and discovery. Unfortunately, the AHC has also proved at times to be a frustrating organizational matrix of indecision wrought by different aims and distributed influence, presenting substantial challenges to the success of these institutions. The question of how best to organize the fiduciary and executive management structures of the AHC continues to be the subject of much interest to those trustees responsible for these complex institutions. Although the question of what is the best governance model for an AHC is sometimes approached in simple terms of "one leader, or multiple," success is more likely defined by how well other critical factors are organized and managed. These include considerations of governance, including selection and education of key trustees, their ability to access key data for their specific institution and the AHC as a whole, performance evaluation of the operating executives with respect to both specific institutional criteria and those for the AHC as a whole, and management oversight by boards across the AHC. When more than one governing body is involved, joint participation of boards and key executives is recommended for selected aspects of these processes.

A new approach to medicare: implications for health care reform and for medical education.

Medicare Parts A and B engender a system of payment and delivery at odds with that of health maintenance organizations (HMOs). Most evident in the conflicting incentives and requirements levied on primary care physicians participating today in both traditional Medicare and HMOs, the dichotomy has vitiated the promise of managed care and constitutes a significant factor in both the rising cost inflation in health care and the growing dissatisfaction of patients, physicians, payers, and insurers. The resulting impact affects the robustness and quality of medical education as well as the character and quality of health care delivery. An innovative incentive-based system of payment and delivery is proposed as an alternative option for Medicare, with expectation that the system, which the authors title Medicare-New, or Part N, could trigger a more effective approach to health care reform for Medicare, foster more rational support for medical education and the care of the indigent, and benefit private insurance programs as well. Positive changes in both public and private sectors would strengthen both medical education and the access to and quality of health care throughout the nation.